[NYBOT’s Cotton and Coffee futures prices rose 21.0 percent and 3.8 percent, respectively in 2005. Cocoa was the exception, declining 1.5 percent basis the nearest futures.]
“Our World Sugar and FCOJ contracts have proven to be two of the most active contracts of the year, demonstrating hedgers’ need to pursue price risk management strategies for their respective products, as well as offering investment opportunities to others,” said C. Harry Falk, NYBOT’s President and CEO. “It’s interesting to note that the natural sweetener, sugar, had such a stellar performance this year, because soaring prices for petroleum-based fuels spurred a global interest in ethanol for economic and security reasons.”
Sugar’s dominance of energy-related futures is attested to by its growing role as an energy commodity. According to F.O. Licht, a noted sugar industry group, sugar was the source for an estimated 50 percent of ethanol production last year.
Brazil and the U.S. are the largest producers and consumers of ethanol. Brazil has had a long association with ethanol and has developed technology for flexible fuel vehicles (FFVs). Last year, FFV automobile sales accounted for 71 percent of sales. Industry experts now estimate that all FFVs in Brazil are running on 100 percent ethanol. In the U.S., ethanol is blended with gasoline in amounts ranging from 5 to 85 percent, as a gasoline extender. The U.S. Energy Bill passed last year established a Renewable Fuels Standard that mandates the nation increase its usage of ethanol by 700 million gallons per year until 2012, when the 7.5-billion gallon threshold is achieved.
For the second consecutive year, heavy storm damage to Florida's orange crop propelled FCOJ futures prices 45.4 percent higher. In 2004, a succession of storms criss-crossed Florida, taking their toll on the citrus belt. This was followed by severe and widespread damage incurred by Hurricane Wilma in 2005.
World Sugar at NYBOT accounts for over 40 percent of the total NYBOT volume. Sugar is produced in over 120 countries and consumed by every country in the world. NYBOT’s World Sugar contract trades from 9:00 am to 12:00 pm (NY Time), and has four delivery months including March, May, July and October. The sugar contract calls for 112,000 lbs. of raw centrifugal cane sugar from 29 countries throughout the world.
NYBOT’s FCOJ contract has a trading unit of 15,000 pounds of orange solids, and trades from 10:00 am to 1:30 pm (NY Time).
The New York Board of Trade (NYBOT) is New York’s original futures exchange, where the world trades food, fiber and financial products. For well over a century, the New York Board of Trade has provided reliability, integrity and security in a global marketplace for cocoa, coffee, cotton, ethanol, orange juice, wood pulp and sugar, as well as currency and index futures and options. Information about the New York Board of Trade can be found at www.nybot.com and www.nybotlive.com. To learn more about New York Board of Trade Futures & Options for Kids, the Exchange’s non-profit group, please go to www.futuresandoptionsforkids.org.